Burying your head in the sand around protection can have catastrophic consequences, warns a leading specialist mortgage broker.
“It has been well known for many years that a protection gap has existed in the mortgage market” says Andy McBride, director of Cleerly. “In light of the state of the market at the moment, with the level of mortgage balances in the UK in some form of arrears sitting just under 1% of all borrowing, it suggests that gap will widen even further in the coming months.”
“Ignoring it, however, will almost certainly result in a far worse scenario should the unthinkable happen. Having dealt with making claims on behalf of clients where a thirty something otherwise healthy person has died suddenly, the impact is not lost on us as a business, and we pride ourselves on a rigid belt and braces process.
There are many reasons for the creation and widening of said ‘Protection Gap’, with many brokers feeling uncomfortable having frank and open discussions with clients, especially at a time when many are busier than ever before. Throw in specialist underwriting and it is easy to see why protection often gets overlooked.
“As a contractor specialist broker, we arguably have more to do for our clients than most ‘routine’ brokers, as seldom do we get to place solely based on the best rate available, instead needing to focus on how an application is assessed” adds McBride. “It would be very, very easy with an often-complex process, to overlook any pushback around protection, and focus instead on maintaining our success rates.”
“On the contrary, however, the vast majority of our clients have absolutely no protection in place as part of their occupation, meaning not only are we overlooking a business opportunity, but actually not having the conversation with our clients is failing in our duty of care towards them and their loved ones.”
There is also a warning that just having a conversation is not enough, and that clients need to be challenged to ensure that the right outcome is identified to ensure adequate protection and even reduced cases of over insurance.
“We are in an industry that is unprecedentedly busy at the moment, particularly over the last couple of months with the race to beat the Stamp Duty holiday deadline” continues McBride. “Now more than ever, the temptation to focus solely on the job at hand is all to easy to succumb to. Merely asking the question and having a token conversation, while going above what many brokers do, is simply not good enough.”
“Many of our clients have people who depend upon them to eat, to provide the roof over their head and the clothes on their back. By going a step further and challenging the responses we get when discussing this, we ensure that we are addressing the real needs of each individual situation.”
Protection conversations are often seen as an annoyance, not just for brokers, but also for clients. Nobody likes to talk, or even think, about the worst-case scenario. Having difficult conversations as early as possible, however, often results in a positive outcome.
“It’s only natural that a conversation around you dying prematurely or suffering a horrendous illness is going to be an uncomfortable one” concludes McBride. “There is often an initial barrier or hesitancy when we address this with our clients. After having the conversation however, often our clients thank us for doing so. There is a certain amount of unconscious ignorance towards protection, and ultimately our clients appreciate us doing the right thing by them and their family.”